The head of the International Monetary Fund has told a meeting of the World Economic Forum in New York that he believes the world's economy is heading for recovery.

Horst Koehler, IMF managing director, said: "I think we have to state that the global economy is still weak but we also now hope - and I call it cautious optimism - that really a recovery is under way".

We can't deny to others what we demand for ourselves

Rock star and debt campaigner Bono

He was speaking as police helicopters circled over New York while nearly 2,000 anti-globalisation protesters rallied outside the forum venue.

After two rainy days marked by minor protests, demonstrators came out in force to chant slogans such as "human rights, not corporate greed", and "capitalism, shut it down".

Police chiefs are reported to have deployed more than 5,000 officers to ensure the safety of the 2,700 business and political leaders at the forum, one of the highlights of the global economic calendar.

Delegates range from Microsoft founder Bill Gates to rock star Bono.

A police officer told BBC News Online: "We have a massive show of force here.

"With all that's happened here, I don't think that it is time to be messing with the New York police."

Officers took a tough line with protesters, taking at least two into custody on Saturday, although there were no reports of violence.

Disparate protest

The demonstrations mark the continuation of anti-capitalist protests which have accompanied key economic summits in recent years, with activists challenging claims that globalisation is essential to furthering the interests of developing nations.

US leaders came in for special criticism

The New York gathering has also attracted attention from protesters against action in the US-led "war against terror".

Saturday's first large-scale protest, organised by a group called Act Now to Stop War and End Racism, saw several thousand demonstrators carrying placards calling for the US to end funding to Israel, not to broaden anti-terror action to Somalia, and to "Let Iraq Live".

Another 30,000 activists are attending a rival World Social Forum
in Porto Alegre, southern Brazil. Participants were due to debate an alternative future for the poor.

Activists in New York have restated their commitment to non-violent protests, such as a "virtual sit-in" which they claim was behind the crashing of the forum's website on Friday.

Forum officials, who originally blamed the failure on "overuse", have since said the cause has as yet to be determined.

Argentina

The protests have overshadowed economic stories emerging from the conference, including a call by Peru's President, Alejandro Toledo, for action to prevent economic collapse in Argentina.

"I am going to take advantage of my presence at this forum to
meet with officials of international financial institutions, business leaders and heads of state to tell them not to abandon
Argentina," Mr Toledo said.

"We must act together."

Ali Rodriguez, secretary general of Opec, said the oil producers' cartel was likely to leave output unchanged at its March meeting.

And Treasury Secretary Paul O'Neill echoed the predictions of many economists by expressing optimism about US economic prospects.

"The US economy has the potential to grow at 3% or 3.5% real growth for the indefinite future," he said.